Sunday, 31 October 2010

David Cameron failed in Brussels on Friday because he doesn’t realise that they need us more than we need them.

In Prime Ministers’ Questions on Wednesday (27/11/10) David Cameron arrogantly affused a brief narrative regarding Lady Thatcher’s extraordinary EU rebate negotiations in 1984. After hours of heated posturing European leaders then gave in to Lady Thatcher’s simple argument that Britain’s economic contribution to the Common Agricultural Policy was disproportionate to the benefits brought home by the EEC. So Cameron had set himself for his Lady Thatcher moment, forcing us to find an assessment of whether his self-drawn comparison was justified. He came home after Friday evening in Brussels not just empty handed (he mitigated loss rather than acquired benefit) but also without discernible intended impact of reducing the increase to the EU budget.

I don’t know who was briefing the Prime Minister, but in the last few weeks when Europe was working out how to entrench a huge deposit scheme for national bail-outs, how off the wall his thinking of reducing a budget increase of 6% next year was- and simply how hard he would have to fight in this climate to get it. In simple terms while we are cutting costs back home, Europe is looking for increased contributions for its new monolith insurance policy, which like so many other self-proposed schemes carries with it no Treaty based mandate. The Prime Minister, without being able to effectively understand the eminence of Britain’s position in Europe and the importance of our current contributions to any of these causes, failed to go in there with a plan of reduced exposure to Europe in line with cuts that many domestic areas were facing. He thus did not play the old; ‘we would like to do this, but it is not sitting with what are doing domestically- hence my hands are tied’. Unfortunately, even this evaded the PM.

Lady Thatcher, of course, would have been far fiercer and stronger than that: I suspect she would still be in Brussels this evening, bullish if she had not got what she had wanted. As a result of this the Prime Minister has left a gaping disparity in the Comprehensive Spending Review set out by his Chancellor. I, for one, am still not convinced that those that will lose their public sector jobs at home will be happy that their jobs will be paying for policy development for bailouts for the future debt mismanaged Greeces of this world.

In the end the P.M. got the increase halved, yet an increase it still is. The policy disparity between domestic cuts and international expenditure caused by the upcoming UK contributions to the EU is no longer tenable. The EU expenditure is not negligible. UK’s net EU contributions will increase to £6.9 billion next year, roughly 6.5% of the NHS budget (the equivalent cost of prescriptions for the entire population for over a year or the cost of cancer treatment for the entire population for two years (Source: OHE 2009)). This makes reassessment of benefits of membership timely, as it genuinely affects life-style choices at home due its cost. The arguments thus move beyond self-government and preservation of democracy, to social needs of the UK population including national tax policy which impacts upon economic autonomy of the individual.

This self-assessment is particularly needed given the Lisbon Treaty endows the EU with the capacity to make treaties, making withdrawal now easier than ever. With the end of the Cold-war and growing global privatisation now bringing more and more sectors (and states) into the global market, Britain must branch its export/import circle far above and beyond the Eurozone. After all the Indians don’t speak French but English, and the advantage of bilateral trade increasingly moves us away from multilateralism into the bilateral realm of foreign economic policy. But beyond all this, the EU’s role in promoting global free trade is now questionably ‘redundant’. When the UK entered the EEC global tariffs were significantly high, and the GATT had yet to expand the areas of reduced tariffs now seen within the WTO. (The subsequent Tokyo and Uruguay rounds of world trade negotiations in the late 1970s and 1980s moved the world significantly towards global free trade in an unprecedented way). Now cost of exports and imports vis-à-vis tariffs are negligible, so that most areas of the world no longer have effective barriers to prevent trade. The rise of investment treaties in the last two decades (from over 50 to several thousand) has virtually ended the concept of market barriers. This renders benefits of exclusivity or preference to the Euro-zone for trade and investment dubious, and frees states from being ensconced in international institutions for trade to more global choices in line with global market liberalisation.

It is with this in mind, and with some developed choices in foreign economic policy that the P.M. should have faced the Brussels crowd on Friday evening. The most important thing that the PM should have noted: the UK contributes 13% of the EU budget (£13 billion 700 million Euros) –however, there are 27 member states. Some states contribute nothing. (Romania contributes nothing but still has 35 MEPs sitting in the European Parliament; Bulgaria contributes nothing but still has 18 MEPs sitting in the European Parliament- all able to vote on fiscal policy and expenditure which is based on the contributions of other states). The conclusion, my dear P.M., is simple: they need us more than we need them.

Copyright Abhijit P.G. Pandya 2010.
Copyright Birkenhead Society 2010.

Sunday, 10 October 2010

Social mobility takes a kicking under the coalition

How do you get social mobility? Two basic ingredients, as Lady Thatcher once noted, tell a man who doesn’t work why he should, and tell a man who works to work harder. The nation will benefit, as one will get that most needed of things at the moment, growth. That’s quite important in a recession. Now if you get rid of the carrots it does not matter how hard you beat the stick- it just won’t get the horse to water. Osborne and Cameron spoke of social mobility, they spoke of social justice. By attacking the middle classes, in a series of recent policy decisions, they have undermined both and – most importantly of all the impetus to seek the benefits of pursuing wealth. Or in different terms, the reasons why one should become middle class or richer middle class. So much for the party of aspiration; so much for the Government of fairness.
Let’s look at one recent daft policy to come out- the imbalanced removal of child benefit. It’s not that child benefit being removed that is so much of the problem; it is the nature of this particular policy that ought to cause concern. How can a mother who stays at home to nurture a child where the other parent works be left without the benefit and two parents who both work and might have almost double the salary keep it? The Chancellor’s perverse, disingenuous reason was that there will be some losers and he has to hit ‘every part of society’ (one should note that this an internal term used by the Conservative Party of deliberate reiterative psephology designed to take imaginary left wing voters to bed that do not actually exist). But does this mean that it should be irrational? Does that mean that you should try and trick your way out of an obvious blunder and assume the public are daft? And what of that most important of things: spending time with one’s child to ensure it is prepared for life, and it is supported fully through the vital years? This is particularly important in a time where people often work harder and longer, and see their children less. Parental support so important to a child’s success is being jeopardised through the message given by the Chancellor’s erroneous disparity.
The other policy to note is the real worry for social mobility. The decision to make wealthier graduates pay greater tuition fees, so that their lazier class mates can have an even more fun time at University bunking lessons, boozing continuously and getting a third. The harder you work at University, and the more difficult a course you choose (e.g. Economics, Law, Medicine) the more you will pay for others to do less. Utterly absurd. Take this example, when the best medical students will have the privilege of private practice in say surgery, possibly on Britain’s prestigious Harley Street, they will be paying for a third class flunker in theatre design at some unheard of institute. This will inspire us all Mr. Cameron. Well done. Surely only the mindless of egalitarians, or the mad, will see anything of value here.

Copyright Abhijit P.G. Pandya 2010.
Copyright Birkenhead Society 2010.